Going into the mid-summer months, which is typically when Chinese garlic makes its presence known, reflected in the U.S. f.o.b. price, the U.S. garlic market is strong and should remain so for the foreseeable future.

"There is 25-30 percent less garlic in China than there was at this time last year," said John Wang of Canada Garlic Inc. in Toronto.

He said that it is a simple case of Chinese garlic growers and shippers not making any money over the past two to three years, so they have reduced their acreage and moved into other vegetable crops where the demand was expected to be stronger. Subsequently, there is a shortage of Chinese garlic, demand is high and the prices have skyrocketed. This in turn relieves the downward pressure on U.S. garlic prices that is typical around this time of year.

The Chinese garlic crop is typically harvested in May. After it cures for a month during most of June, it is ready to be processed, packaged and sold in July. Theoretically, the price on the garlic should be at a low point at that time when volume is greatest. "Right now, the f.o.b. price for Chinese garlic is 65 cents per pound U.S. [dollars]," said Mr. Wang. "That is two-and-a-half times what it was last year at this time."

And he said that there is no relief in sight. Mr. Wang noted that the decreased volume combined with the increased demand domestically in China has created a shortage that will not be filled until next year -- and then only if garlic production is increased. In fact, he said that it might not be too long in the future before California garlic is being sold in China.

While that may sound far fetched as California garlic still sells for significantly more than Chinese garlic, Mr. Wang said that prices on Chinese products have increased tremendously, creating a market in China for many U.S. products, including apples. "Right now, Chinese Fuji apples are much higher priced than Fuji apples from Washington. One day, I hope I am selling California garlic in China."

Jim Provost of I Love Produce in Kelton, PA, agreed that garlic supply is currently less than the demand. "By now, there should be lots of Chinese garlic on the [U.S.] market, but it's not here." He said in mid-July that Chinese garlic was selling for $18 for a 30-pound carton, while California garlic was $10 more per carton.

The drop in production in China may well be directly related to the food safety problems that a few Chinese shippers of other food products experienced in mid 2007. That created a bit of a public relations problem for Chinese-made products and probably led to the decrease in production this year.

Mr. Provost said that while there was a slide in demand for Chinese garlic over the past several years, that reluctance to buy seems to have dissipated as the economy has faltered. He said that California garlic gained popularity shortly after China experienced problems with some other items, but the concern has faded as many consumers opt for the cheaper Chinese garlic when the price differential is substantial.

Paul Auerbach, president of Maurice A. Auerbach Inc. in South Hackensack, NJ, said that a number of factors have combined to create the current very strong garlic market. He said that the Argentinean deal started out slow, but by early summer, it had cleaned up earlier than expected and no longer was affecting the market. As the deal shifted to Baja California product, those growers were a little late in getting started, creating a gap and further strengthening the market. At the same time, the forecast was for the new- season Chinese crop to be light, which further added to the demand- exceeds-supply situation. "It looks like the California growers will finally have a pretty good market," he said.

He added that the California crop appears to be fairly normal, though it is not sizing as large as it did last year. Mr. Auerbach said that the situation should create extra demand for the larger sizes and allow those large-sized bulbs to command a premium as the season moves forward.

(For more on the garlic deal, see the Aug. 3 issue of The Produce News.)